A recent report shows signs of a slowing housing market. Deterrents to demand including a slowdown in purchases and increased loan fees. This comes during a time of unprecedented prices in the Tampa Bay area. Prices partnered with a low-level of inventory have led to cities like St. Petersburg, Florida, declaring a housing crisis. Many brokerage companies and online companies are trying to predict the future of the market, with varied results and opinions.
This newest report comes from Redfin, full-service real estate brokerage based in Seattle. The report focuses on two major areas when determining changes in the housing market:
Demand for vacation homes
Demand for vacation homes dropped sharply for the second month in a row in March, with mortgage-rate locks for second homes at their lowest level since May 2020. Demand for vacation homes was still up 13% from pre-pandemic levels, but it’s declining after a pandemic-fueled second-home boom last year. Redfin expects demand for second homes to remain above pre-pandemic levels in the future, as remote work is here to stay for many Americans.
The slowdown in demand for vacation homes joins other early signals that the historically fast rise in mortgage rates and record-high home prices are pricing out some buyers. Growth in demand for primary residences outpaced that of second homes for the second month in a row. Demand for primary residences has remained at roughly the same level since June 2020.
Related story: Record number of homebuyers moving to Tampa
Interest in vacation homes skyrocketed in mid-2020 as many affluent Americans started working remotely and mortgage rates dropped to record lows. Demand declined sharply over the last two months as mortgage rates shot up and some workers started returning to the office.
Loan fees
Another deterrent to demand was the impending rise in loan fees for second-home loans, which increased by about 1% to 4% starting on April 1. The change adds about $13,500 to the cost of purchasing a $400,000 home for the typical vacation-home buyer and will continue to cool interest in vacation homes in the coming months.
